[MUD-Dev] Yamauchi Puts the Industry In Its Place

[msew]

http://www.video-senki.com/feat/yama21.html

>> QUOTE >>

Hiroshi Yamauchi, ancient president of Nintendo, is my absolute
favorite Japanese game executive, for the same reason Fidel Castro is
my absolute favorite head of state. They're both firm as a rock on
their issues, and they're both just so goshdarn sincere, you know?

In this recent interview, part of a look at the tumultuous state of
the Japan game industry by financial rag Zaikai, Yamauchi lashes out
on Sony, Square, net games, and everything else he doesn't like about
the business he commands these days almost by default. As usual, most
of what he's saying is common sense, but the industry could definitely
use some common sense right now.

<< END QUOTE <<

<EdNote: Full interview appended>

--<cut>--
Yamauchi Puts the Industry In Its Place
(Zaikai, February 27, 2001)

Hiroshi Yamauchi, ancient president of Nintendo, is my absolute
favorite Japanese game executive, for the same reason Fidel Castro is
my absolute favorite head of state.  They're both firm as a rock on
their issues, and they're both just so goshdarn sincere, you know?

In this recent interview, part of a look at the tumultuous state of
the Japan game industry by financial rag Zaikai, Yamauchi lashes out
on Sony, Square, net games, and everything else he doesn't like about
the business he commands these days almost by default. As usual, most
of what he's saying is common sense, but the industry could definitely
use some common sense right now.

An interesting side note: Microsoft director of games marketing John
O'Rourke was recently quoted as having the exact opposite opinion of
Yamauchi's vis-a-vis multi-platform releases. Who's right? This time
next year it'll probably be brutally obvious...

My ex-boss John Ricciardi provided this interview to me. He's great.

------

Q: Mr. Yamauchi, you've always espoused that games depend on how fun
they are, and not on how advanced the graphics or hardware is. With
that in mind, how do you look at the downturn the game industry is
currently going through?

Y: Well, what I see right now is lots of people who look towards the
game business with all these dreams in their minds about how bright
the future of the industry is. When you ask them why, they all say
"Oh, all these new systems are coming out that're even more powerful
than the PlayStation 2, we'll be able to create things that'll attract
even more people to games," and so on.  I've been consistently saying
this is wrong, but most of them look at what I say and respond "No,
no, you're wrong", and as a result, this is what's happening
today. There really are just an overwhelmingly huge number of people
out there that know nothing about the business of games. The game
business is a tough one, and it's not been around for that long,
either, so there are people out there that find this industry
incredibly interesting. Venture capitalists, in particular. That's why
these people are pouring money into the field right now.

Q: Because they don't know how difficult it really is?

Y: Right. They give money to people that really should be unemployed,
and they in turn round up some friends, start a company and begin
creating software. But is this really the best way to go about this
right now? The more amazing graphics and sound you put into a game,
the longer it takes to finish. Not just a year, but now, more like a
year and a half or two years. So then your development costs balloon,
and when you finally put it out you have zero guarantee of it
selling. That's what the game industry is today.  Because of that,
I've been saying since last year that this industry will undergo a
major shakeout between now and next year. The general public doesn't
realize it yet, but most people in the industry know it's
happening. I've just been saying that pretty soon, even the public
will be forced to recognize what's going on.

Q: Along with the crisis at Sega, many companies have recently been
reducing their earnings predictions.

Y: True. For example, Square claimed that they would produce several
billion yen (ie. tens of millions of dollars) in profit for fiscal
2000, but more recently they've turned that into several billion yen
in losses, which is essentially exactly what I said would happen to
them before. And Square's a publically-traded company, too!  There are
still many, many private software companies out there, and now all of
these companies have no idea what's going to happen to them in the
future. With all this downsizing going on, I'm sure we'll be seeing
many more announcements like that. The thing with this industry is, no
one actually needs what it produces. If what we were making was
absolutely essential in order to live, then the consumer wouldn't
complain about price or supply, because he'd be in big trouble if he
ran out. On the other hand, we produce entertainment -- and there's a
million other kinds of entertainment out there. If the game industry
went away, it's not like people would keel over and die on the
street. If it came to pass that people started saying "These games are
all stupid, I gotta stop playing them all the time", then what do you
think would happen? You don't need games to live, after all, so the
market could fall right out. It could even shrink to a tenth of what
it was.

Q: Do you think things could become that bad?

Y: Certainly. The average gamer's perspective has gradually shifted
over the years.  They're getting sick of games that are nothing but
graphics and force; they want something to play that's actually
fun. So why are companies still aiming for nothing but graphics and
force?  The most impressive phenomenon that occured last year, in my
opinon, was when Enix released Dragon Quest [VII] on the original
PlayStation, and not the PlayStation 2. It was the newest game in the
series, but it ended up selling far more than I predicted -- something
like three million or so copies. However, when you look only at its
graphics and sound, it looks very rudimentary compared with other PS
games. If you compare it to other titles, you'll find that there are
hundreds of PlayStation games that have far more impressive
graphics. Despite that, out of everything released last year only DQ
was able to rack up such high sales figures. Meanwhile games with
incredible, utterly beautiful graphics were completely dead in the
marketplace. This just backs up what I've always been saying -- games
have nothing to do at all with graphics.

Q: So if you don't keep your eyes on the game itself [during
development], you'll end up meandering down the wrong path.

A: Right. Up until now games have had nothing to do with movies, like
I've kept on saying all this time, but now people are going on about
how every game will be like a movie from now on. We've come all this
way and somewhere along the line, we've forgotten that we're supposed
to be making games, and not movies. Now, as a result of that, game
development is turning into a circus, costs are skyrocketing, users
get bored faster than ever before, and the development of truly new
games -- new ways of having fun -- has all but stopped. And now,
because of all that, it's getting difficult to make a profit producing
video games.  If we don't change the way game development is carried
out, I can't see the industry or the marketplace rejuvenating itself
anytime soon.

Q: Several software houses have undertaken a multi-platform strategy -
signing agreements with Nintendo and others to become licensees for
several different game systems. Do you think this will have a
rejuvenating effect on the industry?

Y: Well, let's say that we make a game called X and we port it to game
systems from Company A, Company B and Company C. Then it doesn't
matter if a user bought A's, B's or C's system, he'll be able to play
game X on his own console. There's no difference between any of the
game systems in this case.  Now I certainly understand the reasoning
behind a multi-platform strategy. As I said before, development costs
have spiralled upward, and it's become difficult to guage how well
something will sell in the marketplace. They want to cut their risks
and be able to sell that many more copies of a single title, so they
decide to just release it on everything. I can understand
that. However, if this becomes the norm, then it'll have a dire effect
on the marketplace. If users can play the same game on every single
system out there, then there'll be no reason to buy one system over
the other. It'll be just like buying a TV; no matter which one you buy
you'll still have all the same channels. In the game business,
software is our lifeblood. If that software becomes the same
everywhere then there'll be zero difference between companies. The
marketplace will just turn into a giant hardware war. Now, you'll
agree with me that TV sets are a fairly indispensible part of life
these days. More people have them then don't. Washing machines and
refrigerators are the same way. People have to buy them no matter
what, so dealers end up relying on added extra features and
advertising to compete in the marketplace. On the other hand, game
machines are far from indispensible. If the software was the same no
matter which system you buy, then the only point we'd be able to sell
on is price. This industry is based on producing fun, innovative
games, but if that goes away then we're all done for. That's why, even
though I understand where software houses are coming from, I think
ultimately it could break apart the industry.

Q: That's why you continue to produce games only for your own systems,
including the upcoming Gamecube.

Y: Yes. Nintendo's business is to make games that can only be played
on Nintendo systems. Nintendo's games only run on Nintendo's consoles,
and no one else's. Our aim is to get people to think Nintendo's games
are the greatest, the best in the world.  We're devoting all of our
effort to that right now, and we'll be able to show our efforts to the
world this year. We'll see how it turns out after the Christmas
season, or about ten or eleven months from now.

Q: What do you think is an appropriate price point for game systems?

Y: The cheaper, the better. Gamers play games, and not systems, after
all. If a gamer wants to play game A and game B, then buying the game
system is nothing but a secondary obstacle to that. As a result, the
cheaper the hardware is, the easier it is for the users to buy it.  At
the same time, though, we have to worry about our costs. Up until
fairly recently it was safe to lose money on hardware sales, since you
more than made up for it in the software you sold. It's impossible to
get a system out the door that way anymore, however. So when you
release a system today, you don't necessarily have to profit from it,
but you can't afford to lose money on every single console you sell.

Q: What is your opinion of your rival Sony's PlayStation 2 game
system?

Y: As a DVD player it's well worth the money; as a game system it has
a few problems. It's just too hard to make software for it. It's
absolutely vital that you design a system such that it's as simple as
possible for developers to create games on. If you don't, then costs
begin to rise, and it becomes more difficult for the designers to
realize their creations. It just becomes a gigantic minus for the
system in developers' eyes.

Q: There have been recent announcements that suggest game systems will
function more as net terminals for online games in the future.

Y: There're a lot of ways of thinking about that. Personally, I think
that most people going on and on about the net know nothing about
video games. People who don't get game creation are going on and on
about networked games -- probably because they can't come up with any
better ideas themselves.
--<cut>--
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